Thursday, June 27, 2013

Zhongpin, Inc = Done Deal

Zhongpin, Inc. (Ticker: HOGS) announced today that shareholders approved the going private transaction and will receive $13.50 in cash. The vote was announced early this morning and the stock was promptly delisted prior to the market open. I have ~ 30% of my portfolio in Zhongpin and I expect the see the cash in my account by July 5th. My net gain will be 2.42% (annualized return of 22.42% assuming I receive the cash by July 5th).

OK, now that ONXX has come out and rejected Amgens offer, now I believe The Finincial Post's story. But who leaked the offer information? Investment Bankers looking to pump up the price?

If Amgen's offer was a 38% premium we have to ask ourselves how much more of a total premium would Amgen or another strategic be willing to pay, 50%? 60%?Price mentioned in NYT article below says $140 which is 61%.

I will be watching this one as well. It might be best to buy shares as soon as possible Monday pre-market if you can get below $120 (+38%) because we know the share price will run up over the next few days based on the news and price speculation. Be smart and seek out an option partner by selling a call option covered by your shares. If you can wait for the stock price to run up after you buy consider selling a deep in the money call (.70 or .80+ delta) to receive a large premium. If the stock price were to fall back some your break even will be much lower. Select JUL calls with small time decay to force an early exercise or select NOV or JAN with large time decay for a much higher premium and a lower break even.

Look at the early price action history of ACT when news broke it was being pursued by Valeant.

"The much anticipated chase for Onyx Pharmaceuticals (ONXX) has begun. Just a year after bursting on the scenes as a white-hot M&A target and weeks after receiving an unsolicited takeout offer from Amgen (AMGN), ONXX announced yesterday that it has hired Centerview Partners to gauge interest from prospective buyers. Now anyone interested in joining this race will have to offer something north of USD 120 a share, which is the price that AMGN offered last month and ONXX rejected on Friday. For a little perspective, USD 120 is roughly 6x greater than the level ONXX traded at three years ago and 3x greater than where it was in April of 2012. In April 2012, however, ONXX had not yet won FDA approval to market Kyprolis, a cancer drug designed to fight multiple myeloma. That green light came last summer and ever since ONXX has been thought of as a prime candidate to be gobbled up by a large pharmaceutical company. Certainly nothing that has occurred since then has weighed on that idea, as the rollout of the company’s cancer-fighter has gone smoothly. Whether AMGN stays in this hunt and whether a company like Bayer jumps into the mix remains to be seen, but if AMGN succeeds, it will be interesting to see what it means for the biotech giant’s capital return program. AMGN has plenty of cash on its balance sheet to pay for ONXX, but much of its cash is trapped overseas and the company has sworn allegiance to its investment grade credit rating. (AMGN is rated A+ by S&P but only Baa1 by Moody's.)"

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About Me

I have a passion for the stock market. I primarily focus my research in the life sciences. I have degrees in Bio and Finance (not that it means much since investing is more of an art than a science). My MBTI personality type is ISTJ. I'm a Generation X'er and was born the year of the pig.